Speech by Prime Minister Kishida at the Keidanren Summer Forum 2024

Thank you very much for the kind introduction. I am KISHIDA Fumio. I would like to express my heartfelt appreciation for inviting me to the Keidanren Summer Forum again this year.

This serves as a valuable opportunity to discuss with you all, who lead the Japanese economy through global management, and receive strict but compassionate guidance from you over beer afterwards. I am truly grateful for the invitation to the forum again this year.

If I remember correctly, I participated in this forum last year right after my visit to Middle Eastern countries such as Saudi Arabia, the United Arab Emirates, and Qatar, accompanied by an economic mission comprised of members of the business community. I recall how refreshingly cool it was in Karuizawa. The Japanese archipelago is hit by scorching heat this year. I recently attended the NATO (North Atlantic Treaty Organization) Summit in Washington, DC for the third straight year, and the temperature there was extremely high, exceeding 40℃. According to media reports, the mercury reached rose over 50℃ in the Middle East and India last month, with the sweltering heat resulting in a large number of deaths.

Once-a-century extreme weather events, which were supposed to hit once in 100 years, occur frequently around the globe. While the climate change crisis has long been pointed out, I feel that we have finally entered an era when we actually experience dire situations caused by climate change.

This week, we held the PALM10 (10th Pacific Islands Leaders Meeting) in Tokyo, which ran through yesterday. This triennial summit involves the participation of the leaders from 19 countries and regions, including Pacific island countries such as Cook Islands and Micronesia. When it comes to island nations, you might have an image of distant islands near the equator. However, these countries once became Japan’s mandated territories after World War I and the South Sea Agency of Japan was established in the region. To take the example of Palau, even now, 20 percent of its population is said to be Japanese descendants. These countries are essential for a “Free and Open Indo-Pacific” and hold strategically great importance. Hence, I ask members of the business community to pay even more attention to these nations.

Obviously, the biggest concern for these island nations facing the threat of rising sea levels is global warming. PALM10 saw lively discussions on “adaptation” to or “mitigation” of climate change, along with “decarbonization.”

On the other hand, we need to begin serious consideration of these “adaptation” and “mitigation” initiatives in Japan, in the face of frequent extreme weather events.

To this end, there have been discussions on disaster prevention and reduction and enhanced national resilience. Speaking of disaster prevention and enhanced national resilience, large-scale public works projects such as construction of “high-standard levees” often come to our mind. Yet new moves are emerging now. We have been witnessing multiple cases involving the combination of digital technologies, innovation, and new “public-private collaboration” to create added value while promoting “adaptation” to climate change.

Examples include the response to once-a-century torrential rains caused by linear precipitation zones. Based on in-depth data analysis, information from geostationary satellites, and weather forecast technologies powered by artificial intelligence (AI), public and private sectors have worked together to identify high-risk areas and prioritize efforts to dredge riverbeds and raise riverbanks in those areas. Thanks to these initiatives, the flood damage in a certain river in the Kinki region has reportedly decreased to one-sixth of what it was five years ago even in the case of a torrential downpour with the same amount of precipitation.

In addition, there has been progress in the integrated river management initiative that utilizes AI and digital technologies. In order to achieve the three objectives of flood control, hydropower generation, and the environmental protection at the same time, the “comprehensive river-basin water management” program has been launched. Under the program, many relevant administrative organs or private companies located in areas from the upper reaches to the lower reaches of a river conduct data linkage to ensure overall optimization.

I visited Yahagi River in Aichi Prefecture this month. This river is a power source for a basin where ten percent of Japan’s industrial production is concentrated. On my visit, I observed a case where through comprehensive river-basin water management, public and private sectors have actually achieved the three objectives of supplying power for the entire river basin with a concentration of ten percent of Japan’s industrial output by enhancing hydropower generation without constructing a new dam on Yahagi River, while protecting the safety of the river basin by fully utilizing AI and digital technologies to flexibly conduct flood control measures, and realizing carbon neutrality at the same time.

Approximately 50 percent of the world’s flood disasters are said to occur in the Asia-Pacific region. Even in the field of disaster prevention, which seems far from international business, efforts are under way to respond to changing times and create new added value or growth opportunities through digital technologies and public-private collaboration. I hope that you will take note of these ongoing efforts as well.

I have repeatedly referred to the phrase “a Japan that turns change into strength” on various occasions.

Japan is currently at a “turning point of the times” in a variety of fields, such as foreign affairs and security, economy, energy, technological innovation, decreasing population and birthrate, and disaster prevention, as I just mentioned, and the country is facing numerous “challenges that cannot be postponed.” We must conceive mechanisms for “a Japan that turns change into strength” in each field, make decisions, and implement them.

Two years and ten months have passed since I assumed the post of Prime Minister. I have faced a number of shocking situations which made me realize that the world and Japan are at a “turning point of the times,” including Russia’s aggression against Ukraine in February 2022.

Thinking through the essence of the “turning point of the times” and making decisions on the direction to take with “big-picture thinking” – I have tacked my work in the belief that “big-picture thinking” and “making decisions” as the greatest mission as Prime Minister.

At the same time, what is expected of politics is the “ability to execute.”

While it is of course important for the political side to be large-minded and leave things to the discretion of people in charge of practical matters when demonstrating its “ability to execute,” I have come to realize that it is also important to smoothly incorporate the hands-on experience and voices of people struggling on the frontline in various areas, adjust the course and speed up the process in a timely manner, and show leadership by striking a balance between these bottom-up and top-down approaches.

I have repeated that “the Kishida Cabinet will work on challenges that cannot be postponed.” What have we done thus far since the inauguration of my administration, and what kind of efforts will we need to make? Today I would like to focus on two points in particular: foreign affairs and defense, and economy.

The first is foreign affairs and defense.

The world has consistently been based on a “free and open international order based on the rule of law” both in the Cold War and post-Cold War periods. However, Russia, a permanent member of the United Nations Security Council, shattered such foundations by its aggression against Ukraine in February 2022.

In the belief that “this is not a conflict confined to Europe, but an outrageous act that shakes the international order itself,” I have made a drastic shift in Japan’s policy toward Russia that had been in place since the Abe administration: Japan decided to impose sanctions on the country. On the other hand, Japan has been providing Ukraine the maximum possible support as a peaceful nation.

I have emphasized on the international arena that “Ukraine today may be East Asia tomorrow.”

Up until today, this phrase I used has been quoted by other foreign leaders in many ways. It has been recognized as emphasizing the nature of the aggression against Ukraine to the world and the fact that the aggression is by no means an issue limited to part of Europe, but an issue for the entire international community. In the NATO Summit in Washington, DC last week, the leaders shared a recognition that “the security of the Euro-Atlantic and Indo-Pacific is inseparable.”

While the international order is shaken to its foundation and division and confrontation are becoming more serious, we must make efforts toward cooperation in the international community. Then what is the basis of cooperation and what yardstick should we base ourselves on? These are the most difficult points I have thought through in advancing diplomatic efforts.

The values of Western democracy alone will not lead countries to reach agreement, as there are diverse ideas toward state regimes and democracy in the world. Cooperation based on economic support, namely, in terms of profit or loss, will not easily lead the international community to unite, either. When I think about the yardstick under these circumstances, I came to think that the idea of an international order based on the rule of law or cooperation based on international law, including the United Nations Charter is important; that the sovereignty and territory of each country must not be violated; that unilateral attempts to change the status quo by force must not be tolerated; and that countries may be able to agree on these fundamental ideas of international law. With this in mind, I have pushed ahead with summit diplomacy.

In March last year, I visited Ukraine, marking the first visit for a Japanese Prime Minister to a country at war. This led to President Zelenskiyy’s visit to Japan on the occasion of the G7 Hiroshima Summit in May. On the final day of the summit, we sat around the same table and held a discussion on what kind of thoughts we should share to work together going forward, with the participation from Global South countries and others in addition to G7 leaders, including President Zelenskiyy, Prime Minister Modi of India, President Lula of Brazil, President Yoon of the Republic of Korea. At the meeting, we reached a consensus that we would protect the “rule of law” and other fundamental principles to achieve lasting peace.

Some countries in the Global South are now suffering from rising energy and food prices and soaring international commodity prices, and certain authoritarian nations are trying hard to propagate false narrative that “the current international order led by the United States and Europe must be revamp.” Indeed, there are some Global South countries attracted by such idea. However, against this background, Japan has made its arguments that: we must be united in that international law, including the UN Charter, is for vulnerable countries and people, and that protecting human dignity based on international law is for those countries and people; we must not tolerate the violation of sovereignty and territory or unilateral attempts to change the status quo by force. With these arguments, Japan has made outreach efforts and earned support from many countries. This is how Japan has led discussions on the global stage in its diplomacy.

This year is said to be the “election year” for many major countries. It is said that  we are facing a possibility that the framework of international politics will change.

They also argue that tense situations may arise in Ukraine and the Middle East this summer and beyond. Nevertheless, amid such a situation, Japan must value its diplomatic assets as a peaceful country that has earned the deep trust of the international community, while vigorously advocating for the yardstick and standards on which the international society should base itself, as I just mentioned, and emphasizing that we must create a society where the international community will work together toward cooperation, rather than division and confrontation. I think that Japan’s diplomatic power will continue to be put to the test going forward.

Japan will thus create an international environment favorable to itself through such diplomatic power, summit diplomacy, and so forth, and make it serve its national interests. While these diplomatic efforts are of course important, the reinforcement of defense capabilities that provide backing for the diplomatic power and protect the lives and livelihoods of the people as well as the strengthening of deterrence and response capabilities also hold importance. Hence, my administration decided to spend 43 trillion yen to strengthen defense capabilities.

Moreover, the modernization of the Japan-U.S. alliance is indispensable. I made an official visit to the United States in April this year, and on that occasion, I delivered an address to bipartisan Senate and House members of the Congress, in which I stressed that “the United States played a central role in creating the post-war international order, which, however, is now wavering, and Japan hopes that the United States will continue to engage in the formation of the international order with confidence.”

A Japanese Prime Minister went to the U.S. Congress to make a speech and gave encouragement to its members, saying, “The United States must not look inward,” “Japan hopes that the U.S. will approach the world with confidence,” “Japan stands with you,” and “Japan will support you,” and the Congress members welcomed it with standing ovations for dozens of times. When you think about it, Japan’s standing on the global stage, along with the international community itself, has considerably changed, as we are about to mark the 80th anniversary of the end of the war next year. This is what I was reminded of when giving a speech on the floor of the Congress.

The political situation in the U.S. toward November is unpredictable. Nonetheless, while keeping an eye on the situation, Japan must take a basic approach of putting into action the message I conveyed to the bipartisan lawmakers and the people of the United States.

Besides that, what is noteworthy in terms of foreign affairs and security is the Japan-ROK relations, which have undergone dramatic changes over the past two and a half years. With deep mutual trust with President Yoon, we have conducted shuttle diplomacy and already held more than ten summit meetings. We held another on the occasion of the NATO Summit, so we had talks for well more than ten times.

When I look back, the Japan-U.S.-ROK summit in Camp David last summer was another epoch-making meeting.

My opinion is that the leaders’ decisions and the improved Japan-ROK relations based on trust have made possible the Camp David meeting, and I believe that fostering confidence between the leaders and making the bilateral relations even more unwavering toward the 60th anniversary of the normalization of diplomatic relations next year is one of the highest priority issues in Japan’s diplomacy.

With regard to the Japan-China relations, we held Japan-China summit meetings with President Xi Jinping last autumn, and in the autumn of 2022 and 2021. In last autumn’s summit, we agreed to advance bilateral talks at various levels, and I believe that Japan must continue to utilize every channel to comprehensively promote a “Mutually Beneficial Relationship Based on Common Strategic Interests” and build “constructive and stable Japan-China relations.”

In this context, in January this year, the joint visit to China by Keidanren, the Japan-China Economic Association, and the Japan Chamber of Commerce and Industry resumed after a four-year hiatus. Cooperation in the economic field has consistently been the foundation that supports stable development of the Japan-China relations, even before the normalization of diplomatic relations between the two countries. Practical inter-governmental cooperation and private-sector exchanges as the two wheels on the axle have helped expand and deepen the bilateral relations. I would like to thank the business community again for its efforts to make exchanges more active. We will continue to make government-wide efforts to ensure legitimate economic activities of Japanese companies in the global market.

Now let me move from foreign affairs and security to economic policies.

Since my inauguration, I have put forward a “New Form of Capitalism” and pursued virtuous cycles of growth and distribution and of wages and prices. I have worked on the issue with the strong conviction that we must break away from the deflationary economy characterized by “low prices, low wages, and low growth” and “shrinkage orientation” that have dominated Japan for the past 30 years and transition into a growth-oriented economy by all means.

I think that “signs” of the “transition” to a new economic stage are clearly visible, as shown by the shunto spring wage negotiations resulting in a five percent wage increase, aggressive capital investments that exceed 100 trillion yen, corporate governance reforms that foreign investors laud, and record-high stock prices, among others.

With the determination that “we will not miss this opportunity, and we will never let things backslide,” we formulated a policy package in June, which I believe is the product of the unanimous resolve of the Government and the ruling parties.

In this connection, Chairman Tokura and members of the business community share this resolve and provide strong support for economic revitalization. In particular, the shunto negotiations produced extremely strong results with a 5.1 percent wage increase, according to the final figures. New public-private collaboration is going on in economic management as well. I extend my sincere gratitude for your cooperation and express my heartfelt respect for your leadership.

We work closely together with the Bank of Japan, while sharing a broad economic perspective. The normalization of monetary policy will facilitate the transition of the economic stage, which in turn will lead further neutralization of monetary policy. We will steadily go down the path of economic management in this direction.

The “transition” of the deflationary economy to a growth-oriented economy requires changes in socially accepted ideas and business practices concerning prices and wages spread throughout the economy. It will take a certain period of time, not one or two years, to change the mindset that has persisted for more than 30 years. The Government, on its part, will mobilize all possible measures, including legislation and government-initiated wage increases to thoroughly pass on prices, with a view to making the period as short as possible.

On the other hand, some people are economically hit hard by rising prices during the “transition” to a growth-oriented economy. As we need to make thorough preparations to make steady progress in the “transition,” including support for these people, we will offer swift and fine-tuned support in “two stages” for people who may be left behind due to a harsh summer and high prices, in addition to the “fixed amount tax reduction” that started in June.

As a first step, we will introduce “one-time” fast-acting energy subsidies for gasoline, electricity, and gas on a scale that will push down consumer prices by more than 0.5 percent points every month until the end of the year. As for a second step, we will draw it up as part of an economic package to be formulated in autumn and discuss measures focused on households living on pension, people with low income, and regional economies.

The “support” measures I mentioned are of course important; however, the “core issue” is, after all, to improve the growth potential of Japan.

One of the biggest factors that have long prevented Japan from breaking free from the “deflationary economy” is the “mindset” deeply rooted in the entire society. Due to the prospects for the decreasing workforce, pessimistic outlook for the Japanese economy has become a commonly accepted view; more and more companies have adopted measures too focused on cost-cutting; consumption has stagnated amid growing concerns over the future; and traditional employment practices have been adhered to. Such situation has continued.

However, there is currently a rapid shift in era. I am confident that we can achieve strong growth if we discern such big “changes” and “adapt” to them in a timely manner. This is a “growth strategy that turns change into strength.” Let me introduce three major “changes” I attach importance to.

The first major “change” is improved productivity with digital technologies and AI.

Dr. Schwab, who attended today’s session via video and whom I met at the Prime Minister’s Office this month, says, “This world is facing a mega change from the age of industry revolution to the age of intelligence revolution, which will go down in the history of humanity.” It strikes me that he points out the essence of the issue.

I think that the conventional idea that “prospects for the Japanese economy are bleak due to the decreasing workforce” are becoming obsolete in the age of intelligence revolution.

I believe that we should think that on the contrary, Japan has large room for growth in the age of AI-driven industrial transformation. Although there exist concerns that AI and digitalization will wield a heavy impact on employment in many countries, concerns over such pressure on employment are less grave in Japan as the country will see its working population decline. I believe that this is the reality of Japan, and there exist a variety of “barriers” in the country now.

Such barriers include the “barrier” of the English language facing small- and medium-sized enterprises, the “barrier” of expert groups and keiretsu (corporate affiliation) observed in large enterprises, the “barrier” of labor market mobility, the “barrier” between male and female employees or between older and younger employees in the equal pay for equal work policy, and the “barrier” of human resources between the public and private sectors that will lead to inflexible policies. I am certain that overcoming these “barriers” with digital technologies and AI and “recombining” talent and resources will help us achieve a large increase in productivity and strong growth. I would like to reiterate that Japan has such room for growth. And then the second major “change” is strong public-private collaboration.

In today’s world, countries are facing a fierce competition in the field of economy as well. Some countries resort to economic statecraft; in other words, they put forward state capitalism and do not hesitate to engage in economic coercion, information monopolization by the state, or technology theft.

How will we confront these countries, and how will we win the intense economic competition among nations? When we think about them, I think that we need to make efforts to enhance Japan’s technological standards and make the country “indispensable” in terms of parts and raw materials and production equipment across the value chains under the close cooperation among like-minded nations.

To this end, going beyond the simple dichotomy of the public and the private, new public-private collaboration involving “both sectors” is more important than anything. The public sector will show a clear direction and multi-year commitments, thereby encouraging private-sector activities in a predictable manner.

From such viewpoint, we have boldly embraced new ideas and promoted their implementation without being confined to conventional policy methodologies, as in semiconductors, decarbonization, and strategic domestic investments. Going forward, we intend to further enhance these efforts in such fields as biotechnology, space, and quantum.

These strategic domestic investments under the public-private collaboration will serve as a booster for a full-fledged “virtuous cycle of growth and distribution.”

As the third and last “change,” I would like to present the formula of “GX (green transformation) combined with DX combined with Asia.”

Asia, especially the ASEAN (Association of Southeast Asian Nations), will continue to be the center of growth for the world, and the Asian economy is now about to undergo further transformation with GX and DX.

U.S. platform providers and Chinese big techs have made a series of large-scale investments in Asia. Some point out that Japanese companies are slightly lagging behind.

However, Japan’s strength is “trust” that it has earned over the years. It is necessary to show a concrete shape of the country’s basic stance of co-creation.

I believe that Japan must strive and cooperate, in order to spread added value of the entire AI ecosystem throughout society in Asian countries, rather than corporate giants monopolizing outcomes or siphoning off information. These efforts include the proposal of a “public-private collaboration platform” that will make it possible or support for GX and DX investments coupled with human resources development and policy coordination. Japan will make good use of its strengths, help Japanese companies to advance into Asia, and incorporate the growth potential of Asia. Such “growth strategy that turns change into strength” will be a main policy pillar.

One concrete example of this is the Asia Zero Emission Community (AZEC) initiative, which receives great cooperation from the members of the business circle. Last December, the leaders of Southeast Asian nations met in Tokyo to hold the first AZEC summit, and I shared the hope that “we will cooperate in Asia.” Energy transition in Asia requires a huge amount of finance, and Japan will support it with its financial and technological capabilities, so that Japan will bring Asia’s growth potential into the country and grow together. Based on such idea, we intend to advance the Asia Zero Emission Community (AZEC) concept with the cooperation from the business community.

Along with this “growth strategy that turns change into strength,” efforts to build an “asset management-oriented nation” are also a main pillar in revitalizing the Japanese economy.

We will create a cycle of channeling personal financial assets that exceed 2,000 trillion yen into corporate growth and providing households with returns reaped from enhanced corporate value. In addition to the new NISA (Nippon Individual Savings Account) program, we intend to conduct bold reforms on iDeCo (individual-type defined contribution pension plan) by the end of the year.

Other than these, there are various points of discussions to proceed with policies and move the economy forward, including strategic investment support, integrated promotion of GX and DX, investments in human resources, specific measures to increase investment in startups tenfold, and an ideal social security system in a growth-oriented economy. However, due to time restrictions today, I would like to leave these issues for another time.

As I stated today, I think that we must steadily carry out diplomatic and security efforts and economic policies. I see the media are present in the venue today, but these days the press have been asking me only about the political schedule for this autumn. However, I believe that what is important for Prime Minister is, after all, to pursue policies for the peace, prosperity, and future of Japan.

I have stated that I will concentrate on delivering results in each and every challenge that cannot be postponed and that I am not thinking of anything else at this time. It is my responsibility to dedicate myself to implementing policies. Let me conclude my remarks by asking for continued valuable guidance and cooperation from the members of the business community. I look forward to the reception later.

Thank you very much for your kind attention.